Re-mortgage for Home Improvements, Capital Raising, Holidays, etc

A re-mortgage is a mortgage taken out to replace an existing one. There are a number of reasons to re-mortgage, the major ones are explained below. The purpose of the re-mortgage is can be to raise money from existing equity in a property, convert to a better deal or to consolidate debts.


Capital raising
If you need to raise funds for any reasonable purpose, a capital raising re-mortgage could be the right choice for you. By remortgaging your home you can release capital and pay it off at a lower interest rate than you would if you arranged an unsecured loan. The cash could be for home improvements, a holiday, new car or simply to consolidate existing debts.

 

A capital raising re-mortgage can be a very useful short-term solution to financial problems, whatever you need the money for. The lower interest rates mean that by increasing your mortgage, you will likely pay less than getting an unsecured loan. However, you should consider the fact that it will mean larger mortgage repayments and a longer repayment term. There may also be early repayment charges on your current mortgage.


Home improvement
Extending or improving your home can be a very cost effective option instead of moving home, with all the expense and upheaval that it can create. If you need to raise funds for an extension or other project, you might want to consider either a secured loan, re-mortgage or further advance from your existing lender.


Debt consolidation
People who already have a mortgage but who have financial problems look for a debt consolidation re-mortgage so they can straighten out their personal finances. Perhaps there has been a problem with illness or job loss that has meant that arrears and defaults have crept on to their credit file. Perhaps recent rises in interest rates has meant that they are struggling financially and are unable to meet the payments on credit cards, loans and finance deals as they should. Whatever the reason, a debt consolidation mortgage may seem like the best way to fix finances and start again.

 

Holiday / cars
The reason for a re-mortgage may have nothing to do with existing debt or home improvement but to release funds for any other legal purpose.

 

Buy another property
When you re-mortgage your home you can normally borrow between £25,000 and £500,000, depending on the value of your property. Re-mortgaging will assist you in obtaining a bigger loan at a lower interest rate. This is ideal for the purchase of another property.

 

Business purposes
A re-mortgage to raise funds for business purposes is an attractive proposition for a sound business. The interest rates are generally lower for residential loans than for commercial loans. The greatest risk to this type of loan is that you could literally lose the roof over your head if the business gets into trouble. For this reason they are not recommended as a solution to short-term business cash flow problems or to start a business. The confidence that the business is doing well and will continue to do well must be high and some lenders are reluctant to offer residential re-mortgages for commercial purposes.

 

Also see our Commercial Mortgages Section

Buy to let
One reason for re-mortgage is investment in another property for business purposes. Buy-to-let is a form of residential investment where you buy a property, usually with the aid of a mortgage, and rent it out. The 1988 Housing Act made investment in residential property more attractive to landlords when it introduced a new type of tenancy giving landlords more control over their properties and there has been a modest recovery in the private rented sector since then. The increased availability of loans at attractive rates of interest for buy-to-let purchasers has also increased the appeal of owning rental property. When you buy a property to let out, you are becoming a landlord. And owning investment property is not like owning your own home. Instead you are effectively running a small business.

Further advances
This is an additional loan by a lender to the borrower based on an existing mortgage. The value of the further advance is dependent on the equity in the property, i.e. the amount of the mortgage already paid off.


For further information regarding a re mortgage then please feel free to fill out the form below and we will contact you today.

 

 

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Commercial Mortgages and Buy to let mortgages are not typically regulated by the FSA

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

We do not charge a fee for mortgage advice. A fee based option is available of typically 2% of the mortgage amount.
For example on a loan of £25,000 the fee would be £500



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